US. Property Market

Some briefs from news stories on the other side of the pond:

USA Property Market

January 2010

As the New Year turns, many eyes around the world will be looking to the USA and particularly the real estate market for indicators of a recovery.

Bank Closures Update - Jan 2010: The FDIC closed 140 Banks in the USA in 20090, up from 25 in 08, with more expected to fall this year.

Archive from 2009

August - Foreclosure filings in July hit record high monthly numbers for the 3rd time in just 5 months. RealtyTrac reports 360,149 notices, that is an amazing 1 in 355 homes!. Nevada, one of the Boom States, shows a 32% increase in foreclosures from last July, with 1 in every 56 houses recieving a ´Notice´. With record Unemployment numbers (247,000 in July) more people than ever are in Negative Equity situations. Property website Zillow estimate 25% of mortgage holders owe more than their home is worth. Worse still, 126,000 personal Bankruptcy filings in July alone, with forecasts of 1.4million by the end of the year.

Not So Bad North Of The Border - Teranet-National Bank report year-on-year real estate prices in Canada fell 5.8%, a rise from -4.1% previously. Modest declines by coparison.

May 09- The Case Shiller Index, which takes data across the 20 largest Metro areas, shows year-on-year real estate prices are 19.1% down.

March 09 - The Greater Las Vegas Association of Realtors reports house sales are on the increase again (Compared to 2008) Noting the ´declining prices are driving sales´. Officially the average property sales price stands 50.6% less that recorded average at the peak of June 06.

Feb - A report by RBC warns of up to 1000 US Banks could fold over the next 2-3 years. With Commercial loan defaults escalating along with residential in freefall, it looks like a rocky road for the lenders?Real Estate Data website Zillow estimates total US Real Estate has fallen in value by over $6trillion since Summer 06, with much more to come! The overall rate of decline is increasing, with Q4 08 falling more than the whole of 2007.

Feb  - Jan- Nationalised Mortgage lender/underwriter Freddie Mac will request a further $35billion liquidity bail out from the US Treasury to help see it through the imediate future. This follows an initial bail out of $13.8billion.

Jan- Robert Schiller, co-developer of the Case/Schiller Index, USAs most prominant house price report, and Yale Prof. of Economics, suggests the US housing markets´ downward trend still has some way to go. He also said that whilst he doesn´t want to be ´bearish´, indicators suggest the price slide will continue beyond 2010. Prices fell 18.6% in 2008 (Sharpest fall in over 20 years), with up to 15% fall expected this year.

Speaking of the Case/Schiller S & P index,property values in 20 metro areas fell 18.2% in 2008. However, the National Accosiation of Realtors reports a 9.0% fall in home values across the USA. They also report increases in 28 of 152 Metropolitan areas......

January - US company RealtyTrac, the Foreclosure specialist, recently revealed it´s property database contained more ´Repossessed´ bank owned units (REOs) ´For Sale´ than MLS listings. There are also rumours that Bank are holding back REO property from the market, in fear the flood will further depress prices.

January - Home Price Index from First American CoreLogic suggests Real Estate prices will continue to fall but at a slower rate than last year. Citing their index has maintained a consistant Year on Year rate of between 10 - 11% for 9 months, suggesting about a 10% fall for 2009. First American report prices fell in 70% of States in the USA with an average fall of 10.6%.

From 2008

December 08 - Fed Drops Base Interest Rate to  ZERO % !!!

A dramatic move by the Federal Reserve to help stimulate the economy, save jobs, and avoid an even more catastrophic meltdown. In a rare move the Fed set a rough guide to interest at between Zero and 0.25%. But will it be enough? (Oyster comment: In our humble opinion No.)

September 08 - More Banks in the USA close

Market Trading Investment Bank Lehman Brothers files for Bankcuptcy

Now that the reality of the Credit Crisis is hitting big Banks like Lehmans, is this going to effect the USA economy, and subsequently you? (We think it will, and in a significant way.)

This negative outlook is mirrored across the Atlantic in Europe and even in some Regions further East! With Banking a global industry, this is likely to make them even more cautious over lending, increasing the LIBOR rates and making mortgages and borrowing more expensive.

and.......

US Federal Reserve Bank  Bails out AIG

AIG might not mean much to us in the UK other than Manchester Uniteds shirt sponsor, but in the USA they are one of the largest players in the financial world. They´re active in virtually every sector and all would feel a chill wind if the Fed had let it ´fail´. But a $85billion Government bail out for a majority stake in the company, effectively nationalizing it, has prevented the worst disaster scenario on Wall Street. However, the long term implications are far from positive, particularly after the government stated it wouldn´t bail out any more private sector companies. We expect this to be a big issue in the lead up to the November election.

August 08 - Foreclosures Rise in USA Property Market

Realtytrac, the USA company that follows Foreclosure numbers latest report shows a jump of 55% in properties in default & foreclosure to 272,171 (That´s 1 in every 464 across the country) with Bank repossessions jumping 184%.

Realtytrac follows 230 metro areas across the States, cited Cape Coral/Fort Myers in Florida as the worst area affected with 1 in every 64 properties filing!!. As a State, Nevada suffered worst with one in every 106 properties affected. But California, once the darling of the property boom, saw an 85% increase in foreclosure to 72,285 units. Followed by Florida & Arizona.

Online research company zillow, claim that of the homes bought since 2003 (5 years) 29.1% are in negative equity. Worse still is that a staggering 45% of property bought in 2006 is now worth less than the mortgage borrowed against them.

Prices continue to fall, with an average Year on Year drop of 9.9%. Los Angeles has seen prices fall 27% whilst Las Vegas follows with 21% fall.

Some Experts are predicting another 2 - 3 years of deflation before things start to turn around.

Previously:

2008 - Head of the US Federal Reserve, Ben Bernanke shows off new tool in understanding Real Estate price change across the USA with the  USA Property Prices Map

See US Property Price Map